The state of Andhra Pradesh has signed a memorandum of understanding (MoU) with central government-owned company Oil and Natural Gas Corporation (ONGC) to establish an LNG Regasification Terminal in Kakinada Deep Water Port.

The terminal will be set up with an investment of $6.03bn (Rs 40,000 crore) and will use a state-of-the-art floating storage and regasification unit (FSRU) with a peak capacity of five million tonnes per annum (mtpa).

It would become the first LNG terminal on the East Coast of India when operational, and will have a provision to double its capacity to 10 mtpa.

Andhra Pradesh Chief Minister Chandrababu Naidu said that the 21st century belongs to gas and ‘we are going in a big way to harness our coastal areas for setting up more LNG terminals in the years to come’.

The state is also looking for port-led state development that will both increase its GDP and meet its energy needs.

Agreements made

Two foreign energy firms – Royal Dutch Shell and GDF Suez – have signed a terminal company agreement with Andhra Pradesh Gas Distribution Corp (APGDC) to develop a floating storage and regasification unit at the Kakinada Deep Port.

An initial investment of $271m (Rs 1,800 crore) is reported.

The agreement will see APGDC hold a 48% stake, while GDF Suez and Shell will each have a 26% stake.

To market the gas from the terminal, GAIL, Shell and GDF Suez also signed a second trading pact to source the gas and market the regasified LNG. GAIL will own a 48% share, followed by 26% each for Shell and GDF Suez, respectively.

A first-of-its-kind LNG terminal in India would prove to be an important infrastructure development for the import of LNG on country’s eastern coast. This FSRU-based LNG terminal will play a far reaching role in making natural gas available to various consumers in industrial, commercial and domestic sectors, GAIL (India) Ltd said.



APGDC is a joint venture between GAIL subsidiary GAIL Gas Ltd and AP Gas Infrastructure Corp. Ltd, an organisation floated by the state government to tap gas deposits.